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4-year probe of River Birch winds up exposing problems in Department of Justice

Ray Nagin Indictment: Jim Letten

U.S. Attorney Jim Letten's office spent years going after River Birch landfill owner Fred Heebe, not pictured. But Heebe survived the probe, which the government ended Friday, without ever facing charges, while Letten and two of his top prosecutors resigned as a result of revelations of improprieties in the office.
(Photo by Nola.com | The Times-Picayune archive)

I would hope the Justice Department does reveal some of the reasons why it decided not to continue with the prosecution." -- Bennett Gershman

Federal authorities in New Orleans spent perhaps four years -- not to mention millions of dollars and man-hours -- trying to land a harpoon in the side of River Birch landfill owner Fred Heebe. But the white whale won out Friday, when prosecutors threw in the towel, tossing out the indictments of a top River Birch lieutenant and his brother-in-law, and saying they don't intend to charge Heebe.

The local U.S. attorney's office, meanwhile, is still reeling from the damage it suffered as a result of taking on perhaps the wealthiest would-be defendant ever in its sights. Though he was never charged, Heebe went on the offensive, and he hit pay dirt, unearthing evidence that two of then-U.S. Attorney Jim Letten's top prosecutors were making inappropriate comments online using aliases. The resulting scandal ended the careers of both prosecutors, and ultimately was the undoing of Letten, until then the nation's longest-tenured U.S. attorney.

Story by

Gordon Russell

and Manuel Torres

Staff writers

The abrupt end to the case shocked legal observers. The Washington team that took over the probe after last year's commenting scandal had been aggressively litigating the case, and the sudden capitulation led to speculation that there could be still more unflattering revelations about the U.S. attorney's office on the way.

Bennett Gershman, a Pace University professor and an expert on prosecutorial misconduct, called the government's surrender "startling," saying he couldn't remember a case in which a probe's target had been given assurances he wouldn't be charged.

"I'd have to guess there's more to this than we've seen in terms of irregular conduct by the people on the government's side," Gershman said. "There's got to be something that would embarrass the Justice Department and the U.S. attorney's office if the case were to continue and go to trial."

Laurie Levenson, a professor at Loyola Law School in Los Angeles, had a similar take. "When the (eventual) trial becomes more about prosecutorial misconduct than about the evidence, you've got a problem," she said. "What a mess."

Government retreat almost without precedent

The prosecution's sudden retreat is almost without precedent, former U.S. Attorney Harry Rosenberg said.

"I cannot remember a situation where the government has charged an individual, filed superseding indictments, litigated aggressively up until the eve of trial, and then decided to voluntarily withdraw the indictments," Rosenberg said.

A Justice Department probe into possible misconduct inside the U.S. attorney's office, which was due Jan. 25, could be a hidden factor, he said.

"Whether that report has made it to the higher echelons of the Department of Justice, and they've made a decision they don't want to deal with prosecutorial misconduct charges like those that led to the charges being thrown out against (U.S.) Sen. (Ted) Stevens -- well, it's certainly a reasonable conjecture," Rosenberg said.

Stevens, an Alaska Republican, was convicted on corruption charges, but the conviction was later overturned when it was revealed that prosecutors hid evidence favorable to Stevens. The case for prosecutorial misconduct in Stevens case was led by Washington-based lawyer Brendan Sullivan, who is part of Heebe's legal team.

Rosenberg noted that there are other possible reasons for the Justice Department's abandonment of the case. The government lost a recent ruling in its case against River Birch chief financial officer Dominick Fazzio, for instance, when U.S. District Judge Helen "Ginger" Berrigan ruled that two alleged conspiracies involving Fazzio would have to be tried separately. But the ruling, while adverse, didn't seem devastating to prosecutors, Rosenberg said, concluding: "I would be surprised to find out that ruling was the death knell of those cases."

The day of that ruling -- Tuesday -- prosecutors in the River Birch probe were aggressively fighting efforts by Fazzio's attorney to have a forensic expert examine a device Titus used to secretly record conversations with Fazzio in June 2011. U.S. Magistrate Judge Alma Chasez appeared inclined to let Fazzio's team get their hands on the device, which was disguised as a pen.

Three days later, prosecutors filed a one-sentence document saying they were dropping charges against both Fazzio and his brother-in-law, Mark Titus, "based on evidentiary concerns and in the interests of justice." The charges were dropped "with prejudice," meaning the two men cannot be charged for the same alleged crimes in the future. The two were facing trial April 1.

The expanding River Birch probe

The Heebe case appears to date to late 2009, when investigators began looking into then-Jefferson Parish chief administrative officer Tim Whitmer's sideline insurance business. Among Whitmer's customers was the parent company of River Birch, the Waggaman landfill co-owned by Heebe and his father-in-law, Jim Ward. The landfill had just inked a now-defunct 20-year deal with the parish that would have required Jefferson to close its own landfill. Investigators started looking more broadly into how Heebe and Ward exerted their considerable political stroke to gain a near-monopoly on the waste disposal business in southeastern Louisiana. Rumors that various politicians were on the River Birch payroll proliferated.

In late 2010, the FBI raided River Birch's West Bank offices, and the next year, Henry Mouton, a former state Wildlife and Fisheries commissioner, pleaded guilty to taking more than $463,000 in bribes from Heebe - listed in court documents as "Landfill Owner A."

In 2011, investigators even examined a $250,000 no-interest loan Heebe made to WWL radio show host Garland Robinette. The loan had come after Robinette had repeatedly criticized the reopening of two New Orleans landfills that were taking post-Katrina debris away from River Birch. Robinette, who repeated Friday that he did nothing wrong, has said he repaid the loan last fall by transferring to Heebe a property valued at $235,000.

By 2012 it seemed only a matter of time before Heebe would be indicted. But Heebe began counter-punching, outing prosecutor Sal Perricone in March of last year as the online commenter "Henry L. Mencken1951." With Perricone's resignation, the fuss died down, but months later, Heebe uncorked his haymaker, unmasking Mann, Letten's longtime top assistant, as "eweman."

Defense attorneys also began alleging that the online commentary was only one aspect of a broader pattern of misconduct by prosecutors in the case. They claimed the government had improperly assured Titus they would not seize his property in return for his help to accuse Fazzio, and that prosecutors improperly met with Fazzio alone, though they knew he was represented by a lawyer.

While those gambits met with limited legal success -- and the government denied any improprieties -- Berrigan, clearly vexed, referred on more than one occasion to the "troubled history of this prosecution."

Mann had been tasked with conducting an initial inquiry into Perricone's actions, and had assured both Letten and two federal judges that the online commenting started and stopped with Perricone. After Mann was unmasked as an online commenter herself, U.S. District Judge Kurt Engelhardt blasted Letten's office in a Nov. 25 order, requesting a probe from outside the office.

Letten stepped down shortly thereafter, as did Mann. The office has been helmed on an interim basis by Dana Boente, the first assistant U.S. attorney for the Northern District of Virginia, while John Horn, who holds the same position in the Northern District of Georgia, began a probe of Letten's office.

The abrupt end of the River Birch family of cases will no doubt leave New Orleans-area residents scratching their heads. Was the case against Heebe simply weak? Or are prosecutors letting a bad actor off the hook because the case is just too badly damaged to pursue?

"They may have decided that going after Fred Heebe was not important enough to justify the risk," said Shaun Clarke, a former federal prosecutor. "There was the potential for any conviction to be overturned because of misconduct, and they may have just decided this thing was too tainted. But it may have been that when someone without a bias looked at it, they said this case isn't very good."

Gershman of Pace University said it's important that the Justice Department reveal as much as possible about what went wrong. In the Stevens case, a judge appointed an investigator, who issued a 525-page report that said prosecutors hid "significant exculpatory evidence."

"Transparency is important here," Gershman said. "I would hope the Justice Department does reveal some of the reasons why it decided not to continue with the prosecution. You've got persons who have been charged with serious crimes. That leaves people with serious concerns about the integrity of the justice system. People lose confidence when they see something like this happen.

"Maybe they're throwing in the towel so they can avoid public embarrassment. Well, that's not a good reason. Hopefully, there's some public disclosure."

One thing that may never be known is how much money the government spent chasing a case that eventually came to naught. The money is "easily into the millions," Clarke said, adding: "I don't think we'll ever know how much time, money and energy was spent on this. Time, money and energy that could have been spent on something else."

"This isn't necessarily what taxpayers like to see," Rosenberg added.

First defendants to plea didn't come ahead

The abandonment of the case against Heebe may cause future defendants to question the conventional wisdom that when one is targeted by the feds, the best smart play is to be the first one to cut a deal.

Though Heebe apparently won't be charged with paying bribes, Mouton has already pleaded guilty to taking them, and he'll have to take his medicine. Businessman Hendrikus "Hank" Ton has also admitted to his role in a payroll tax fraud scheme that the government had alleged also included Fazzio, the River Birch executive. Ton's attorney, Kenneth Polite -- who has been recommended as the next U.S. Attorney by U.S. Sen. Mary Landrieu -- declined comment Friday. And Titus is already serving a five-year prison sentence.

"I'm not aware of anything they can do to put that genie back in the bottle," Rosenberg said of Mouton. "He's pled guilty, acknowledged in open court that he committed a crime ... So now I think he's got to face those charges. The question is whether the government is going to do anything for him."

Mouton is due to be sentenced June 19. His lawyer, Mary Olive Pierson, said she hopes the end of the River Birch probe will mean a break for Mouton, even though he can't back out of his plea. "I'm just very hopeful this will produce a positive result for Henry," she said. "Henry seems to be the only one under the bus now."